The Abu Dhabi and Dubai property markets may expect prices to adjust further given the arrival of more new supplies, says property advisor and solutions provider TASWEEK Real Estate Marketing and Development in its latest comprehensive market report.
Abu Dhabi continues to come under pressure from the swing of units coming online. TASWEEK projects rent and sale prices to fall between two and 10 per cent in the Emirate across different properties at various locations as new prime and non-prime supply enter the market. The real estate sector is expected to continue moving further in favor of tenants and occupiers after the delivery of an additional 2,900 residential units in Q2 2012. Total stocks are currently at around 199,800 units.
Al Reem Island is a strong residential market, with average rent prices for studios at AED 90,000 and 1-, 2- and 3-bedroom units coming at AED 100,000, AED 120,000 and AED 160,000 respectively. Many tenants are eyeing good deals at Muroor Road, which offers studio and 1-, 2- and 3-bedroom units at AED 50,000, AED 60,000, AED 70,000 and AED 85,000, respectively.
As for commercial space, Al Maryia Island has the highest rates at an average rent price of AED 2,600 per square meter. Businesses can find more bargains at Markazeyah, where the average rental rate is 900 per sqm. Commercial space for sale at Al Reem Island has an average asking price of AED 10,935 per sqm.
Despite signs of price recovery in select prime locations, Dubai also may feel the same price squeeze as Abu Dhabi in face of the stream of new supply. Non-prime and less popular areas in the emirate have been sustaining between two and five per cent price drop since the second quarter of this year.
The Dubai International Financial Centre (DIFC) commands the highest average annual rental rates in the Emirate, at AED 75,000, AED 80,000, AED 110,000 and AED 230,000 for studio and 1-, 2- and 3-bedroom units, respectively. Downtown Dubai is another solid market, with studio and 1-, 2- and 3-bedroom units going at AED 50,000, AED 65,000, AED 126,000 and AED 180,000 respectively. Tenant bargains can be had at International City, where average annual payments are at AED 21,500, AED 32,000 and AED 40,000 for studio and 1- and 2-bedroom units, respectively. Dubai Silicon Oasis also offers good annual rates of AED 24,000 and 40,000 for studio and 1-bedroom spaces.
DIFC once again leads the local market in terms of average commercial rent and buy rates, with commercial space fetching AED 16,799 per sqm on the buy side and AED 1,605 per sqm on rental basis. Jumeirah Lakes Towers offers the lowest rates at AED 4,077 per sqm for buyers and AED 535 per sqm for renters.
With the exception of a slight rally observed in some of Dubai’s prime locations, real estate recovery is pressurizing property prices in general continue to fluctuate in Abu Dhabi and Dubai as more units continue to be added to the existing market inventories. This sustains TASWEEK’s earlier predictions that financial obligations and return on investments will be the dominant factors towards market growth through the end of 2012.
Masood Al Awar, CEO of TASWEEK, adds that the expected shift in demand to distressed Eurozone countries could further impact the UAE market. Al Awar explains that more real estate investors are eyeing European bargains in light of the continent’s economic pressures.
Before joining SME Advisor, I worked as a producer/reporter for Forbes Media in New York. I obtained a Bachelor’s degree in Journalism and International Studies at the University of South Florida in the US. I am currently in Dubai working as Sub-Editor for SME Advisor Middle East, which is a business magazine published by CPI. You can follow me on Twitter: @joumanasaad or @SMEadvisorME and (Joumana Saad) or (SME Advisor) on LinkedIn.